With the introduction of financial tools like debit cards, smart cards and other “stored value” cards, consumers have more ways to access funds than ever before. Likewise, the number of systems which can use these devices, like ATMs, debit terminals, telephone IVR systems, and internet-based systems have likewise multiplied in number. One of the effects of this increase in electronic access cards and systems is a corresponding increase in electronic funds transactions.
The present invention relates to a certain class of financial cards, i.e. cards which permit the user only to spend the amount of money which has been previously loaded onto the card. Usually these financial cards are attached to an account held at the bank which sponsors the card. “Loading” refers to the process of remotely depositing funds into the account associated with the card, generally via a local merchant.
Institutions holding these accounts have very little risk in handling these transactions since by definition transactions which would result in a negative balance are not permitted.
For instance, Risafi in U.S. Pat. No. 6,473,500 discloses what is now recognized as a reloadable debit card. Benkert in U.S. Pat. No. 6,796,497 discloses cards with attached subsidiary cards which can control how the money on the card is allocated and spent. Martin, Jr. in U.S. Pat. No. 6,304,860 discloses a system to use the ATM network to facilitate automated debt payments.
However, there are situations where permitting such an account to become overdrawn, i.e., carry a negative balance, would be an extremely useful enhancement.
Therefore a need has arisen for a system which permits certain reloadable debit card accounts to become overdrawn. However this must be done in such a way as to eliminate any risk to the institution holding the accounts.